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March 3, 2025

SEC Approves $4,614,679.81 Distribution Under the BitClave Fair Fund

Summary of the SEC Enforcement Action

In May 2020, the SEC announced charges against BitClave PTE Ltd., a blockchain services company operating out of Singapore and California, for conducting an unregistered ICO of digital asset securities (SEC.gov | Unregistered $25.5 Million ICO Issuer to Return Money for Distribution to Investors). According to the SEC’s order, from June through November 2017 BitClave raised approximately $25.5 million by selling its Consumer Activity Tokens (CAT) to about 9,500 investors worldwide, including in the United States (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816). BitClave had promoted the ICO to fund a blockchain-based search platform for targeted advertising, emphasizing an expectation that the CAT tokens would increase in value and facilitating their trading on third-party platforms (SEC.gov | Unregistered $25.5 Million ICO Issuer to Return Money for Distribution to Investors). The SEC found that these token sales constituted an offering of securities, and BitClave had failed to register the offering or qualify for an exemption, thereby violating the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816).

BitClave settled the charges with the SEC without admitting or denying the Commission’s findings (SEC.gov | Unregistered $25.5 Million ICO Issuer to Return Money for Distribution to Investors). In the settlement, BitClave agreed to a cease-and-desist order and to return the ICO proceeds to investors. The company was ordered to pay disgorgement of $25,500,000 (representing the funds raised), prejudgment interest of $3,444,197, and a civil penalty of $400,000 – totaling $29,344,197 (SEC.gov | Unregistered $25.5 Million ICO Issuer to Return Money for Distribution to Investors). The SEC’s order also required BitClave to undertake remedial actions, including transferring all remaining CAT tokens in its control to the Fund Administrator for permanent disabling (burning) and requesting the removal of CAT from all digital asset trading platforms (SEC.gov | Unregistered $25.5 Million ICO Issuer to Return Money for Distribution to Investors). BitClave, which has since wound down its operations and ceased support for its platform (SEC.gov | Unregistered $25.5 Million ICO Issuer to Return Money for Distribution to Investors), consented to these measures as part of resolving the SEC’s allegations of an unregistered securities offering.

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BitClave Fair Fund: Purpose and Distribution Process

To ensure that the money paid by BitClave is returned to harmed investors, the SEC established the BitClave Fair Fund pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002 (BitClave PTE, Ltd.). The Fair Fund pools the disgorgement, interest, and penalty amounts paid by BitClave so that investors who suffered losses in the unregistered offering can be compensated (SEC.gov | Unregistered $25.5 Million ICO Issuer to Return Money for Distribution to Investors). In other words, instead of these funds going to the U.S. Treasury, they are set aside specifically for the benefit of BitClave’s investors. The Fair Fund’s purpose is to provide restitution to those who purchased CAT tokens in the 2017 ICO (and in certain subsequent transactions) and were adversely affected by BitClave’s failure to comply with the securities laws.

Distribution Process Timeline: The SEC, through its Division of Enforcement, undertook a comprehensive process to distribute the Fair Fund to eligible investors. Key milestones in this process include:

  1. Fair Fund Creation (May 2020): The SEC’s settlement order formally created the BitClave Fair Fund to facilitate distribution of the $29.3 million in disgorgement, interest, and penalties paid by BitClave (BitClave PTE, Ltd.). The Fair Fund is intended to hold these monies until they can be disbursed to investors harmed by BitClave’s conduct.
  2. Administrator Appointment (2021): The SEC appointed Kurtzman Carson Consultants LLC (KCC) as the Fund Administrator to manage the claims and distribution process (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816). (Miller Kaplan Arase LLP was earlier designated as Tax Administrator to ensure proper tax treatment of the Fund (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816).) KCC’s role as Fund Administrator is to handle investor communications, process claim forms, determine eligibility under the plan, and execute the distribution of payments to investors.
  3. Proposed Distribution Plan (Dec 2022): On December 1, 2022, the SEC published a Proposed Plan of Distribution for the BitClave Fair Fund and invited public comment for a 30-day period (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816). This Proposed Plan outlined the criteria for eligibility, the method for calculating distribution amounts for each investor, and the procedures for claiming funds. Stakeholders had an opportunity to review and comment on the plan before it was finalized, ensuring fairness and transparency in the distribution process.
  4. Plan Approval (Feb 2023): After the comment period, the SEC approved the Final Plan of Distribution on February 9, 2023 (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816). The approved plan (as corrected and finalized) detailed the methodology for allocating the Fair Fund among eligible investors. Under the Plan’s terms, investors who purchased or acquired BitClave’s CAT tokens between July 25, 2017 and May 27, 2020, inclusive (the period covering the ICO and up to the date of the SEC’s order) are potentially eligible to receive a payment (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816). The plan of allocation calculates each claimant’s recognized loss and a pro rata share of the Fair Fund, so that distributions are proportionate to the harm suffered.
  5. Claims Submission Deadline (Aug 2023): Investors identified as potentially eligible were required to submit a claim form to participate in the Fair Fund. The Fund Administrator made a claim form available on the BitClave Fair Fund website and notified investors of the process (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816). All claim forms had to be postmarked or submitted no later than August 8, 2023 (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816). This deadline was established to allow the Fund Administrator to review claims and determine the total valid claims against the Fair Fund. Investors were advised to provide documentation of their CAT token purchases during the eligible period as part of the claims process.
  6. Claims Review and Validation: Following the submission period, the Fund Administrator examined each claim to verify eligibility and calculate approved claim amounts in accordance with the Court-approved Plan of Allocation. In March 2024, the SEC (through the Office of Distributions) notified claimants whether their claims were accepted or denied, based on the Plan’s criteria (SEC Approves $4.6M Payment to Investors Affected by BitClave’s Crypto ICO). Any deficiencies in claims were addressed during this phase to ensure that only legitimate claims would be paid.
  7. Disbursement Authorization (Nov 2024): Upon completion of the claims review, the Fund Administrator compiled a payment file detailing the approved claims and corresponding distribution amounts. On November 19, 2024, the Commission issued an order authorizing the disbursement of $4,614,679.81 from the Fair Fund for distribution to eligible investors (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816). This amount represents the approved payouts to all investors whose claims were validated under the Plan. The funds were transferred to an escrow account for the Fair Fund at a U.S. bank (Huntington National Bank, N.A.) to facilitate the payments (BitClave Investors Recover $4.6 Million In SEC Settlement Payout). The SEC’s authorization in November 2024 effectively gave the green light to begin sending payments to investors.

Each of these steps was conducted under SEC oversight to ensure a fair and orderly return of funds to investors. The use of a Fair Fund in this case is a reflection of the SEC’s commitment to remedy harm to investors when enforcement actions result in monetary penalties. By consolidating BitClave’s disgorged gains and penalties into a fund for investors, the SEC aimed to make BitClave’s investors as whole as possible through the distribution process.

Commencement of Payments to Harmed Investors

With the distribution plan finalized and approved, the payments to harmed investors have now begun. In mid-November 2024, the SEC confirmed that it had started the process of returning money to BitClave’s investors. On November 19, 2024, the Commission issued an order approving a disbursement of approximately $4.614 million from the BitClave Fair Fund to eligible investors (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816). Shortly thereafter, SEC officials announced that reimbursement checks were being mailed out to affected investors. “The checks are in the mail. We are sending out more than $4.6 million to investors harmed by BitClave PTE Ltd.’s unregistered ICO of digital asset securities,” the SEC noted in a public statement on its official X (Twitter) account, adding that after the notice-and-claims process, investors would “now be receiving their share of the BitClave Fair Fund.” (SEC sends reparations to BitClave ICO investors).

This development marks the commencement of tangible relief for those who participated in BitClave’s 2017 ICO and suffered losses. Investors who submitted approved claims can expect to receive payments corresponding to their pro rata share of the Fair Fund as calculated under the distribution plan. The initial distribution of $4.614 million represents the funds currently available and approved for payout. The SEC’s order and public communications in November 2024 serve as confirmation that the Fair Fund distribution is underway, turning the penalties and disgorged funds from the enforcement action into compensation for investors. Eligible investors should begin receiving their payments, typically via mailed checks or similar payment methods, in the period following the SEC’s announcement. This process is being carried out by the Fund Administrator in accordance with the SEC’s order, and it signifies the successful implementation of the Fair Fund for the benefit of BitClave’s investors (BitClave Investors Recover $4.6 Million In SEC Settlement Payout).

How Eligible Investors Can Claim Funds and Seek Assistance

Claiming Funds: Eligibility for a payout from the BitClave Fair Fund was determined through the claims process outlined above. In general, investors who purchased or acquired BitClave’s CAT tokens between July 2017 and May 2020 (and who suffered a loss as calculated by the Plan of Allocation) needed to submit a claim form by the August 8, 2023 deadline to be considered for compensation (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816). Investors who met the eligibility criteria and filed timely claims do not need to take any further action to receive their funds – these approved claimants will automatically be issued a payment from the Fair Fund in the amount determined by the SEC’s distribution plan. The Fund Administrator has been coordinating the mailing of checks (or other approved payment methods) to all investors with valid, approved claims. Each such investor will receive a notification detailing their payment. If you filed a claim and it was accepted, you should receive your Fair Fund distribution in due course; there is no need to separately request the payment. The SEC’s November 2024 disbursement order explicitly authorized payment to all eligible claimants on record (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816), so those investors can expect to receive their share of the funds shortly.

Investors who did not submit a claim form by the deadline or who are unsure about their eligibility may have limited recourse, since the formal claims process has concluded. However, if an individual believes they invested in the BitClave ICO (or bought CAT tokens in the relevant period) and has not been contacted or included in the distribution, they should reach out for guidance (see contact information below). It’s possible that all available funds are being distributed in this initial tranche; late claims may not be accepted at this stage, but the Fund Administrator or SEC can provide information on whether any further distribution opportunities or remedies exist. Do not assume you are eligible for payment unless you filed a claim or receive confirmation – the Fair Fund distribution is based on the approved claims that were submitted before the deadline.

Seeking Assistance and Information: The SEC has provided resources for investors to obtain information or help regarding the BitClave Fair Fund. The court-appointed Fund Administrator, KCC, is the primary point of contact for questions about the claims process and distributions. Investors can visit the official BitClave Fair Fund website (maintained by KCC) at www.BitClaveFairFund.com for detailed information, FAQs, and important documents, including the approved Plan of Distribution and claim form (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816). The website may also allow investors to check the status of their claims or obtain updates on the distribution progress. In addition, KCC has established the following contact channels for the BitClave Fair Fund:

Investors with questions about how to complete a claim (if, for example, they received notice and need assistance) or who need to update their contact information for receiving payment should contact the Fund Administrator through the above email or phone number (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816). The Fund Administrator can assist in verifying eligibility, confirming whether a claim was approved, and addressing any issues with the delivery of funds.

For additional assistance, investors may also contact the SEC’s Office of Distributions. The SEC’s Office of Distributions oversees the Fair Fund process and can address inquiries or concerns about the distribution from a regulatory standpoint. As noted on the SEC’s BitClave Fair Fund notice, questions regarding the filing of a claim or distribution details can be directed to the SEC’s Office of Distributions (via the mailbox or contact information provided in the SEC’s notice) (SEC.gov | In the Matter of BitClave PTE Ltd. Admin. Proc. File No. 3-19816). While the Fund Administrator is responsible for the day-to-day handling of claims, the SEC’s Office can provide assurance that the process is being conducted according to the approved plan and SEC rules.

Avoiding Potential Fraud: Importantly, investors should be vigilant about potential scams or unofficial communications. All legitimate correspondence regarding the BitClave Fair Fund will come from either the Fund Administrator (KCC) or the SEC. Neither the SEC nor the Fund Administrator will ever ask investors to pay any fee to receive their distribution. If you are an eligible claimant, your payment comes directly from the Fair Fund – you do not need to send money to anyone to claim your funds. Be cautious of any unsolicited offers to “help” you recover your BitClave investment for a fee, or any communications not originating from the SEC or KCC. When in doubt, contact the Fund Administrator or the SEC directly using the official contact information above.

Regulatory Considerations and Legal Disclaimers

The enforcement action against BitClave PTE Ltd. highlights several important regulatory considerations for investors and issuers alike. First and foremost, the SEC has reaffirmed that securities laws apply to cryptocurrency and digital asset offerings. In the BitClave case, the SEC determined that the CAT tokens sold in the ICO were “digital asset securities,” meaning they met the definition of an investment contract under the federal securities laws (SEC.gov | Unregistered $25.5 Million ICO Issuer to Return Money for Distribution to Investors) (SEC.gov | Unregistered $25.5 Million ICO Issuer to Return Money for Distribution to Investors). BitClave’s marketing of the tokens – including statements that token value would rise with platform adoption – gave investors a reasonable expectation of profit derived from the efforts of BitClave, which is a hallmark of a securities offering (SEC sends reparations to BitClave ICO investors). Issuers of securities, whether digital or traditional, must comply with the registration requirements of the Securities Act, unless a valid exemption is available (SEC.gov | Unregistered $25.5 Million ICO Issuer to Return Money for Distribution to Investors). The SEC’s Cyber Unit Chief, Kristina Littman, emphasized in the BitClave matter that companies cannot ignore these requirements: “Issuers of securities, traditional or digital, must comply with the registration requirements of the federal securities laws” (SEC.gov | Unregistered $25.5 Million ICO Issuer to Return Money for Distribution to Investors). This case serves as a clear reminder that selling crypto-assets to the public without proper registration can lead to regulatory action, including penalties and the forced return of funds to investors.

It should also be noted that BitClave’s settlement with the SEC was reached without an admission or denial of wrongdoing (SEC.gov | Unregistered $25.5 Million ICO Issuer to Return Money for Distribution to Investors). In settlements of this nature, the respondent (BitClave) consents to the entry of the SEC’s order and the imposed remedies, but does not formally admit to the SEC’s findings. This is a standard SEC practice and means that, while the SEC’s findings are final for purposes of the enforcement action, BitClave has not admitted to violating the law in a court of law. Nevertheless, the company is bound by the settlement terms, including the payments and undertakings. One such undertaking was that BitClave disable its remaining tokens and seek their delisting from exchanges, to prevent further trading in the unregistered security (SEC.gov | Unregistered $25.5 Million ICO Issuer to Return Money for Distribution to Investors) (SEC sends reparations to BitClave ICO investors). This was an important step to protect investors and the market from ongoing harm – essentially ensuring that the token involved in the illegal offering could not continue to be traded.

From an investor protection standpoint, the creation of the Fair Fund in this case is a significant regulatory outcome. Under Section 308(a) of Sarbanes-Oxley, the SEC has authority to distribute civil penalties to investors (not just disgorged profits), allowing for more complete compensation. The BitClave Fair Fund is an example of the SEC using this tool to make harmed investors whole, to the extent possible (BitClave PTE, Ltd.). Investors receiving payments should understand that these funds are the result of an SEC enforcement action – they are not a refund from the company voluntarily, but a court/SEC-ordered return of ill-gotten gains. The distribution of Fair Fund monies does not signify an endorsement of the underlying investment by the SEC, nor does it erase any losses beyond the amounts available in the Fund. In some cases, the total harm to investors may exceed what is collected; investors are being paid on a pro rata basis as fairness dictates. If any portion of the Fair Fund remains undistributed (for example, due to uncashed checks or residual amounts), such funds will be handled according to the Plan (often returned to the Treasury or used for further distributions, per the court’s approval).

Finally, this matter underscores the SEC’s broader regulatory stance that compliance in the cryptocurrency space is not optional. The BitClave enforcement action was part of the SEC’s ongoing efforts to police the ICO market and require issuers to abide by U.S. securities laws. Since the time of the BitClave settlement in 2020, the SEC has continued to bring actions against numerous digital asset issuers for similar violations. Companies conducting token sales are on notice that the SEC will enforce registration requirements and pursue disgorgement and penalties when those laws are violated. For investors, the BitClave Fair Fund distribution demonstrates that, when possible, the SEC will act to return funds to victims of securities law violations. However, not all crypto investments gone awry result in recoveries, so investors are urged to exercise caution and due diligence with new offerings. The SEC’s Office of Investor Education and Advocacy (via Investor.gov) provides resources about the risks of ICOs and how to spot potential red flags.

Legal Disclaimers: This article is intended to inform investors of the SEC’s enforcement action and the Fair Fund distribution related to BitClave PTE Ltd. It is not legal advice. The information herein is drawn from SEC orders and public statements. Any legal claims or rights of investors will be governed by the SEC’s Order and the approved Distribution Plan in In the Matter of BitClave PTE Ltd., Admin. Proc. File No. 3-19816. Investors with questions about their individual situation should contact the Fund Administrator or the SEC as noted above. All distributions are made strictly in accordance with the terms of the SEC’s Plan; if you did not file a claim or were deemed ineligible, you will not receive a payment from the Fair Fund. BitClave PTE Ltd. has been held accountable by regulatory action, and the outcomes described (payments to investors, penalties, etc.) are the result of that legal process. The SEC’s action against BitClave stands as a reminder that federal securities laws will be enforced to protect investors and maintain market integrity (SEC.gov | Unregistered $25.5 Million ICO Issuer to Return Money for Distribution to Investors). Investors should remain informed about their rights and the status of any Fair Fund distributions, and reach out to official sources for any needed assistance in claiming funds.

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